Portobello Group resumes growth
The Brazilian ceramic group has started the year 2024 with positive results. In Q1 revenues grew by 7.7% compared to Q1 2023, with exports up 10.4%.
The Portobello Group made significant progress in 2023 despite the macroeconomic and sectoral instability in Brazil and in the group’s main export markets.
In the domestic market, the Tijucas-based ceramic tile group reported 3.4% revenue growth in 2022, surpassing R$1.74 billion (approximately US$358.5 million at the exchange rate on 31/12/2023). This growth outpaced the national average for the sector. According to data published by the Brazilian tile manufacturers' association Anfacer, total tile sales in the domestic market fell by 5.7% in volume last year, forcing manufacturers to reduce plant utilisation rate to just 64% of the country's total installed capacity.
However, exports performed less well, with the Portobello Group's export revenues falling by 12.2% compared to 2023 to reach R$450.7 million (a decrease of 8% in US dollars to US $85.4 million). This contraction was primarily due to a negative performance in the first nine months of the year. However, the fourth quarter showed a marked recovery of 22.9% compared to the same period in 2022, with no less than 67% of sales generated by large-format tiles.
Overall, Portobello Group posted consolidated revenue of R$2.2 billion in 2023 (at 31/12/2023 exchange rate, about US$453.2 million), broadly in line with the previous year's performance (-0.3%), and an EBITDA margin of 13%.
In the domestic market, which accounted for about 80% of total sales, the Group benefited from the strong performance of the Portobello Shop division, which posted revenue of R$917 million for the year. This marked a 12.7% increase compared to 2022 and accounted for 41.3% of consolidated revenue. The success of this business unit helped to counterbalance the negative results from the other divisions: Portobello at -6.5%, Pointer at -14% and Portobello America at -2.2%.
In addition to launching the US plant, the year also saw the opening of 16 new Portobello Shops, increasing the total number of outlets to 158, of which 25 are owned by the group and 133 are franchised. Even excluding the contribution made by the new openings, the division's sales grew by 5% in 2022. Furthermore, the strategy to strengthen the group's presence in the retail segment continued into the first quarter of 2024, with the number of company-owned shops increasing to 28 and the number of franchised shops falling to 128.
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7.7% growth in first quarter of 2024
In Q1 2024, Portobello Group saw a positive performance in revenue and an increase in market share, partly driven by the gradual recovery of the Brazilian ceramic tile market, which experienced a 3.8% growth in consumption compared to Q1 2023.
The group's consolidated turnover reached R$525.5 million (approximately US$104.7 million at the exchange rates of March 31, 2024), marking a 7.7% increase compared to Q1 2023. EBITDA also showed an excellent performance, rising to R$81.4 million, a 62.8% increase, with a margin of 15.5%.
Domestic sales rose by 7.1% in value and 15.4% in volume, well above the sector average, while exports increased by 10.4% over Q1 2023, or 14.4% in US dollar terms, again outperforming the national figure, which saw Brazilian tile exports grow by 5.1% in the quarter.
Regarding the breakdown of revenue across sales channels, exports contributed 19.4% to the total, while within Brazil, the retail segment (Portobello Shop) made up 40.5% of the group's consolidated revenue. Engineering and projects accounted for 21.1% and other retail sales 19%.
In Q1 2024, the group's investments totalled R$45.1 million (approximately US$9 million), representing a 47% decrease compared to the first quarter of 2023. These investments were primarily focused on Portobello America (50.4%), Portobello Shop (23.2%) and Portobello (23%).
All Business Units in good health
In the first quarter of 2024, the Portobello BU reported net revenue of R$229 million, marking a 5.6% increase from the same period in 2023, driven by a strong performance in the domestic market. Despite a 10.2% increase in export volumes, a decline in average prices led to a 10.9% reduction in export revenues. Consistent with its internationalisation strategy, the business unit continued to expand its sales activities into new geographical areas, including Central America, Europe, the Middle East and Africa. Portobello's capacity utilisation reached 88%, significantly higher than the industry average of 65.6% as reported by Anfacer.
The Portobello Shop BU continued to grow in the first quarter, generating revenue of R$217.3 million (+3%), equivalent to 41.6% of the Group's consolidated revenue, and a gross margin of R$105.8 million (+3%).
From January to March 2024, the new US facility bolstered the revenue of the Portobello America business unit, which grew to R$55.6 million. This represents a 33.1% increase over Q1 2023, or a 46% increase when measured in US dollar terms.
The Pointer business unit also performed well with a 10.5% increase in revenue to R$48 million. It posted excellent sales results in both the domestic (+14.5% in volume) and export markets (+160.4% in volume and +125% in US dollar terms), with export revenue accounting for 12.5% of the division's revenue. Capacity utilisation at the Pointer plant was 79.2%.
Forecasts
For the remainder of the year, Portobello Group anticipates a gradual market recovery in both Brazil and the US. In line with typical seasonal trends, the group expects positive developments up to the third quarter, followed by a slight cooling in the fourth quarter. As previously announced, the group will focus on maximising the profitability of investments made during the 2022-2023 period, limiting further expenditures to those strictly necessary for maintenance and ensuring the continuity of operations.
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